ACA Employee Notice Requirement
DOL Announces No Penalty for Failure to Provide Notice
On September 11, the U.S. Department of Labor posted a "Frequently Asked Question" on its webpage dealing with implementation of the employee notice requirement for health benefit exchanges. While employers are still required by law to provide these notices to employees by October 1, 2013, the agency now says there will be no penalty for failure to do so. The notice requirement was created by an amendment to the Fair Labor Standards Act of 1938 (FLSA), but no specific penalty was provided for the requirement. The penalties provision of the FLSA provides penalties specifically for some violations of the Act, like minimum wage and overtime rules, but nothing concerning the employee notice requirements.
FELS will not advise our subscribers to violate the law by failing to provide this notice -- the law says employers "shall provide" this notice; the Department's technical guidance says employers "must provide" this guidance. But, be aware that there is no penalty for failing to do so.
You can read the "Frequently Asked Question" titled FAQ on Notice of Coverage Options at this link.
FELS' parent organization, California Farm Bueau, has created a special website page to provide information on this; you access it at this link.
New Hires must receive ACA notice
There is a new employer deadline under the Affordable Care Act that you must be aware of. Starting October 1, 2013 “ New Hires – Employers must provide the notice to each new employee at the time of hiring beginning Oct. 1, 2013. For 2014, the DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
Current Employees – With respect to employees who are current employees before Oct. 1, 2013, employers are required to provide the notice no later than Oct. 1, 2013.”
Which Employers Must Provide This Notification?
Under the Affordable Care Act, all employers covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), must notify their employees about the new Health Insurance Marketplace, whether or not the employer currently provides health coverage to its employees.
Health Benefit Exchange
Notice & Guidance Published
On May 6, the U.S. Department of Labor published guidelines for employers required to provide notice to employees about the availability of health benefit exchanges (known in California as "Covered California").
DOL earlier in 2013 delayed the employer notice requirement (see Deadline for Notice of Health Exchange Availability Delayed, FELS Newsletter, February 2013).
There are two different forms, one for employers offering coverage and one for employers not offering coverage, and this is yet another paperwork burden imposed on employers. And while employers will not be required to provide this notice until October 2013, since Covered California is not yet accepting enrollments furnishing this notice earlier will likely trigger a blizzard of questions no one can answer yet.
You can find DOL's guidance at this link; model forms for employers who offer coverage at this link; and for employers who do not offer coverage at this link.
If you have questions or comments, please email email@example.com or 800-753-9073.
The Department of Labor's Employee Benefits Security Administration updated its Affordable Care Act web page with the following information on the notice to employees of coverage options:
Required Employer Notices
(Click here for PPACA FAQ)
Health care information for employers
Health Benefits Exchange notice requirements
On Oct. 1, 2013, employers will be required to furnish all current employees and newly hired employees at the time of hire for the duration of 2013 a notice to satisfy Health Benefits Exchange notice requirements under the Affordable Care Act. As of Jan. 1, 2014, new employees must be furnished with the notice within two weeks of beginning employment.
The notice must:
- Include information regarding the existence of an exchange, as well as contact information and a description of the services provided by an exchange;
- Inform the employee that the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the exchange;
- Contain a statement informing the employee that, if the employee purchases a qualified health plan through the exchange, the employee may lose the employer contribution (if any) to any health benefit plans offered by the employer, and that all or a portion of such contribution may be excludable from income for federal income tax purposes.
The U.S. Department of Labor has provided guidance and model notices for your use:
- Employers may use this notice if they do not offer a health plan (also available in Spanish);
- Employers may use this notice if they offer a health plan (also available in Spanish).
The Farm Employers Labor Service, a California Farm Bureau affiliate, offers additional resources to understand and comply with this mandate at this link.
Who is impacted by Health Care Reform?
- The Affordable Care Act requires certain employers who employ an average of 50 or more full-time and "full-time equivalent" (includes some part-time) employees per month in the prior year to provide health care insurance coverage for their full-time employees, or pay a penalty, in 2014.
- It does not apply to:
- Those that do not employ any full-time (30-hours per week) year-round workers.
- Those that do not have 50 or more employees in any month during the year.
- Those that have more than 50 employees a month, but only for 4 months (120 days) or less out of the year and employees number 50 and above perform seasonal work.
Ag Alert Coverage
Employers are required to provide their employees with a written notice about the State Health Exchanges and to explain some of the benefits and consequences to employees if they choose to purchase a qualified plan through the State Exchange, as opposed to electing for coverage under an employer-sponsored health plan. The "Exchange Notice" requirement applies to all employers covered by the Fair Labor Standards Act and must be distributed, in writing (electronic or hard copy). The DOL has delayed the Employer Exchange Notice provision, until the final regulations are released - Read more:DOL FAQ. Previously DOL had announced that the notice requirement was by March 1, 2013.
The notice must include:
1. Services provided by the exchange.
2. Contact information for the exchange.
3. Employee eligibility for premium tax credits or cost-sharing reductions, in cases where the employer sponsored plan does not meet "minimum value" (60% of the total costs).
4. Possibility of losing employer contributions to any employer-sponsored health plans, if insurance is purchased through an exchange.
5. Possibility that a portion or all of an employer's contributions to any employer-sponsored health plans may be excluded from income for tax putposes.
Although HHS has indicated that model notices will be provided, as of January 2013, a release date has not been announced - DOL has not indicated whether a model notice will be given.
The following is a brief Q&A of the new requirement, to better understand the reporting regulation, to see whether or not you'll be beholden to it in the coming calendar year, and what additional steps you'll have to take to ensure compliance:
What is the new W-2 reporting requirement under PPACA?
Employers will provide employees of the cost of their health care coverage on their W-2's. This reporting is for informational use only and will not be included in the empoyees taxable income.
Does this requirement apply to me?
If you filed more than 250 Form W-2's for the 2011 calendar year, you will have to comply with the new W-2 reporting requirements next year -- beginning with the 2012 Form W-2, issued to employers in January 2013. If you have filed less than 250 W-2's, you will not have to furnish this information prior to 2014 (although you can volutarily early report).
Which plans coverage costs must be included?
Answer: Medical Plans, Perscription Drug Plans, Executive Physicals, On-Site Clinics, Medicare Supplemental Policies, Employee Assistance Programs, and coverage under Dental and Vision plans -- unless they are "stand-alone".
Which plams are excluded?
Answer: Flex Spending and Health Savings Accounts, Specific Diesease or Hospital/Fixed Indemnity Plans, Accidental or Disability coverage, Liability and Workers Comp, and Credit-only insurance.
If I self-insure, how do I determine what the "applicable premium" is?
Answer: Through the actuarial method, or through the past-cost method (COBRA continuation coverage).
(Source: National Council of Agricultural Employers, www.ncaeonline.org)